ETF Managers Group, with Spirited Funds, has launched the Spirited Funds/ETFMG Whiskey and Spirits ETF investing in companies that produce or market whiskey or spirits.
Trading on the NYSE Arca, WSKY invests primarily in companies that derive the majority of their revenue from producing and marketing whiskey and spirits, as well as a small number of companies that derive part of their revenue from the industry. Major names in the underlying index include Pernod Ricard (France), Diageo (England). Brown Forman (US), Thai Beverage (Thailand), Kirin Holdings (Japan), and United Spirits (India), among others.
“We believe we’re at year five of a 25-40 year supercycle that could see continued growth in consumer demand for whiskey and spirits, much like what has occurred with craft breweries over the past two decades,” says David Bolton, President and CEO at Spirited Funds.
“Our new ETF is the first to provide exposure to this global industry – with the overall alcohol industry boasting sales of more than USD1 trillion per year – and is intended to play a complementary role in a diversified investment portfolio through exposure to a targeted segment of the consumer discretionary sector.”
The firm writes that in the US alone, High End Premium, and Super-Premium bourbon and Tennessee whiskey brands saw revenues increase 50 per cent and 155 per cent, respectively, in the period 2010-2015, according to the Distilled Spirits Council of the United States. Total US spirits sales were USD72 billion in 2015, including substantial exports.
Bolton further notes that whiskey and spirits companies have historically proven to provide investors with some mitigation in down markets, due both to patterns in consumer behaviour and the commodity-linked nature of the components that go into manufacturing the final product.
Sam Masucci, founder and CEO of ETF Managers Group, says: “The spirits business is global and well established, and appears to be entering a new period of demand growth as consumers migrate to premium brands. We’re excited to have the opportunity to introduce this first-of-its-kind fund.”
The Spirited Funds/ETFMG Whiskey and Spirits Index underlying WSKY is market- capitalisation weighted based on a company’s participation in the overall whiskey and spirits industries, primarily in the areas of production and sale of whiskey and spirits. WSKY will have an expense ratio of 75 basis points.